Good discussion folks…
I only have a few more points to reiterate:
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Cash is the lifeblood of a business and if a company runs low on cash flow, then it has to go to the debt or equity markets for a cash infusion. This usually results in shareholder dilution and/or lower business performance.
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Competitors are not sitting around waiting for SMCI to run away with all the business that is in the backlog. At some point, the backlog starts deteriorating when orders cannot be fulfilled…which we know is happening with SMCI by their own admission. They do not have enough chips coming in and they do not have enough liquid cooling AI rack manufacturing capacity today.
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Low gross margins are very tough to translate into higher profits and higher cash flows. It is quite a grind to lower the cost of goods sold…labor, factory design, raw materials, input components etc…most of these are out of your control or take a lot of time/money to squeeze costs out.
I think Andy said it best…this is a stock that one needs to exit when the tide turns. Just don’t be the last bag holder.
If I had money to put into AI investments, SMCI would not be top of my list. NVDA is one of the few companies making money in AI today…and the stock is still relatively cheaper imo…even now.